Market Summary
On Monday, the S&P 500 Index ($SPX), represented by the SPY ETF, finished up by +1.56%. The Dow Jones Industrial Average ($DOWI), tracked by the DIA ETF, saw an increase of +1.29%. Meanwhile, the Nasdaq 100 Index ($IUXX) closed up +2.18%. Additionally, December E-mini S&P futures (ESZ25) rose by +1.47%, while December E-mini Nasdaq futures (NQZ25) increased by +2.12%.
Market Recovery and Tech Stocks
The stock markets experienced a significant rebound on Monday, recuperating from last Friday’s declines. The recovery was partly due to a shift in the Trump administration’s tone toward China. Stocks in the chipmaking and AI sectors surged, with Broadcom’s shares jumping over 9% following a collaboration agreement with OpenAI for custom chips and networking equipment that could enhance AI data center capacity by 10 gigawatts.
Economic Indicators and Expectations
Cash trading in Treasuries was inactive on Monday because of the Columbus Day holiday. However, gold prices soared more than 3%, reaching an all-time high, driven by central bank purchases, anticipated Federal Reserve rate cuts, and increased demand as a safe haven amidst U.S. government shutdown uncertainties and global tensions. Comments from Philadelphia Fed President Anna Paulson supported stocks by suggesting a preference for two more quarter-point rate reductions this year.
Global Trade Context
The Trump administration expressed willingness to negotiate a trade deal with China to ease tensions after President Trump’s recent threats of 100% tariffs on Chinese imports. Positive trade news from China also bolstered investor sentiment, with September exports rising by +8.3%, exceeding the +6.6% expectation, and imports increasing by +6.4% against a projected +1.8%.
Market Outlook and Earnings Season
Most stock indexes reached record highs last week due to optimism surrounding growth in the AI sector, anticipated corporate earnings, and a resilient U.S. economy. However, the ongoing government shutdown continues to affect market sentiment, delaying key economic reports and potentially raising unemployment rates. This week, attention will be focused on trade updates and efforts to end the shutdown, as well as the commencement of the Q3 earnings season for major banks.
International Market Movements
Overseas stock markets exhibited mixed results on Monday, with the Euro Stoxx 50 gaining +0.67%. Conversely, China’s Shanghai Composite fell by -0.19%, and Japan’s Nikkei Stock 225 remained closed for a holiday.
Notable Movers in the U.S. Market
In specific sectors, chipmakers saw considerable gains, notably Broadcom and ARM Holdings, which rose over +9% and +11%, respectively, following positive collaboration news. Rare earth stocks experienced a surge due to ongoing tensions with China, while mining stocks benefitted from the rising prices of gold and silver. Stocks like Estée Lauder and Ciena Corp also saw positive upgrades, contributing to market growth.
